Successes

Sample Case Studies

Company: General Contractor in a declining housing industry

Problem: A 61-year-old, second generation residential builder in Florida has enjoyed an excellent reputation for building quality, moderately priced homes for years. Although the company experienced modest growth every year until 2007, then, the market cratered. Florida was hit especially hard. The owner didn’t read his own financial statement because

(1) he didn’t believe the numbers and

(2) he didn’t know how to read them. The situation was dire.

The owner hired Hardesty Hackett to “stop the bleeding, point us in the right direction and help us ride out this storm.”

Solution: Hardesty Hackett implemented a series of cost-effective measures to accomplish the owner’s objectives. These include:

• Creating a plan addressing Strategic Initiatives
• Gained acceptance from the owner to involve himself in the process
• Set goals, objectives, time frames and benchmarks for completion
• Re-trained the owner’s “girl Friday” in QuickBooks applications
• Conducted supervisory skills training for his foremen.
• Instructed the owner in how to interpret his own financial statements
• Collaborated with the owner to create a meaningful business plan
• Performed due diligence to acquire a subcontractor’s business
• Initiated job costing using the QuickBooks module

Results Achieved: The owner made the transition from his single focus on residential housing to include commercial and industrial as well. He soon believed and understood his own financial statements. Job cost went from a wet-finger guess to real accountability. A performance-based incentive program was initiated. Direct costs were reduced thereby increasing gross profits. Non-essential overhead was eliminated thereby increasing net profits and owner’s compensation. Equipment loans were brought current, a line of credit was paid down; then increased by $250,000. Accounts receivable were collected and a program for keeping the receivables current was put in place. Vendors were brought current and a plan to stay that way now exists. Cash flow forecasting which did not were exist previously, is now recognized as absolutely mandatory.

What our client had to say: “Hardesty Hackett & Partners is one of the major factors I am still in business today. Mike shed light on the economic slowdown factors and shared with me an assortment of plans so I could ride out the storm. The advice and council Mike gave me in May of last year has been priceless. Over the past year, having Mike to talk to, ask questions and generally give me some direction has been a God-send.”

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Company: Professional Services CPA Firm
Problem: This 20 year old CPA partnership was formed by two CPA’s each with specific but complimentary skill sets. Over the years this small boutique accounting firm had lost its personal touch. The once caring, concerned, respectful attitude had given way to an unmanaged, undisciplined big firm mentality, all in the name of growth. The firm was losing clients at a faster rate than it was acquiring new ones. The partners were bickering, the staff was restless and junior partners were heading for the exit. Twenty-plus years of building a reputation were quickly being eroded. Hardesty Hackett was called in to analyze the current situation and to provide solutions to the uncovered problems.

Solution: Hardesty Hackett performed a thorough diagnostic examination of the firm’s financial dealings for the past few years. We discovered a classic case of “the shoemaker’s children’s.” The firm could tell their clients how to run their business but could not effectively run their own. A series of actions were undertaken to help insure the viability of the firm including:

• The partnership had to be dissolved. The venom and animosity between the two founding partners was beyond repair. Effecting the separation was key to the survival of the firm.
• Responsibility and accountability were noticeably absent in all their dealings. Too much finger pointing and not near enough problem solving.
• The junior partners were in one of two camps; they either sided with one partner or with the other. As a result, a thorough house cleaning took place. A total work force numbering 26 was now reduced to 10.
• Individual clients, small business clients and forensic cases were not being serviced in a timely manner. A plan to provide promised work product in a timely fashion was created and implemented
• A five year plan of controlled, managed growth was crafted and adopted.

Results Achieved: After one year of our on-site and off-site advice and counsel, the firm moved from a breakeven position to a healthy 23.7% increase in pretax profits. The staff was increased from 10 full time employees to 14 full time and 2 part time employees. A partnership track was established and attracted 2 bright, young CPAs. The bookkeeping department became a profit center instead of a cost center. Many small businesses returned as clients. Municipal and county work flourished. A five year exit strategy and succession plan is up and operational. The founders now actually speak to each other…without shouting obscenities.

What our client had to say: “If you are lucky enough to get HH to perform an analysis for you, be prepared for a straight talking, no nonsense event. Their experience of analyzing 1,000 professional firms and companies, large and small, comes through loud and clear. It was one of the best experiences of my professional life.”

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Company: Retail/Whosale Distribution Company
Problem: Starting as a soft drink bottling business, this company had evolved as a warehouse operation for a major bottler, a vending operator and a food preparation enterprise doing a cumulative sales volume of $8.5M. For the preceding three years, the company had profits between ½ to 1 1/2 %, an unacceptable level. This is a family business in every sense of the word. We discovered several components to the operational problems of this company including a lack of a sales & marketing plan, no real delegation of decision making to lower levels of operations, low morale and poor communication, and the company thought they could “sell” their way out of their problems.

Solution: Cash management, communications and getting reliable cost information were our initial objectives.

• We instituted a new credit policy with existing customers. We worked with our client’s personnel to implement the policy and decrease the number of days outstanding from 90 days to 60 days within 3 months.
• We instituted a cash handling and daily reconciliation of route driver’s money. Included was a strict policy about delivering to delinquent credit customers.
• We taught the daughter (Controller) how to properly manage cash outflows to reduce costs by taking prompt payment discounts.
• We increased actual communications and encouraged the delegation of decision making to the lowest practical level. Weekly meeting were held with top management in attendance as well as representatives of every operating department.
• Once we knew what it actually cost to buy, produce, package and distribute a product, it became much easier to know what to charge for it.
• At that point, we changed the perception of “selling more” to selling at a profit.
• With the reformatting of their financial information, we were able to accurately track the cost of selling products and specific lines of products within a product classification, eliminating losers or re-pricing them to be winners.
• We changed their entire vision of sales and made them aware of the need to sell at a profit.

Results Achieved and Comments from the Client: “The most important concept you gave us was to focus on pricing and not on volume. This past month our company sold 2,000 fewer cases of drinks than in the previous month and made $26,000 more in profit.”

“The vending company has gone from a support company that lost money each year to earning over $100,000 in each of the past two years.”

These profits were after we “…updated our fleet of vehicles with new purchases, painted those that were not replaced, did some building maintenance, gave some raises and selected bonuses and implemented an improved 401k plan.”

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